The European Commission, the executive arm of the EU, recently presented two new draft digital-services laws that will affect how Big Tech operates.
What are the new EU regulation laws?
- Digital Service Act– The focus of the Act is to create a single set of rules for the EU to keep users safe online, protect their freedom of expression and help both them and local authorities hold tech companies to account.
- The Act introduces a sliding scale, under which the larger and more influential a firm becomes, more obligations they need to take on.
- The tech companies could also face annual scrutiny of European Commission on illegal and harmful content and restriction on the use of user’s data and promotion of their own services over competitors’.
- They could face fines of up to 6% of a firm’s annual turnover or their break-ups for non-compliance.
- Digital Market Act – Aimed at ensuring fair and open digital market. The act centres on the regulation of “gatekeepers” i.e., operators of search engines, social networks, and chat apps.
- This covers the operators of search engines, social networks, chat apps, cloud computing services and operating systems, among others.
Why US probing big tech companies?
There were allegations and concerns that big tech companies have exploited, entrenched and expanded their power over digital markets in anti-competitive and abusive ways.
- For instance- Recently, Texas and nine other states sued Google. There are allegations of abuse of its dominance in internet search, advertising and its mobile system, to the detriment of rival content producers.
What are the challenges for the success of new regulatory laws?
- First, Formulation of EU laws may take years in the process of consultation and enactment.
- Second, EU’s new digital-services laws would only come into force after the end of Brexit transition period.
- Third, Past efforts at antitrust enforcement were sluggish and did little to directly curb technology companies. Microsoft’s antitrust case commenced in 1998, and reached a resolution only in 2004.
- Fourth, Chances of success of proceedings in US is very slim due to their importance in competing with China and economy of US.
How would it impact India and what are the steps taken by CCI in India?
The impacts of new rules in the E.U., would not be limited to EU only, it could force tech companies to change their practices globally, including in India.
India itself is taking steps to curb the anti-competitive practices. CCI (Competition Commission of India) has increased the scrutiny of these companies and in few cases, actions have been initiated;
- The CCI has initiated a probe against Google for alleged abuse of dominance to force app makers to exclusively use its billing system Google Pay for in-app purchases.
- CCI has been looking into allegations over Google’s alleged practice of creating barriers for firms wanting to use or develop modified versions of Android for smart TVs, such as Amazon Fire TV’s operating system.
- In 2019, CCI held Google guilty of misuse of its dominant position in the mobile Android market for imposing “unfair conditions” on device manufacturers to prevent them from using another operating system.
- In 2018, CCI fined Google for “search bias” and giving “undue” space to its Flights option on its search homepage, over and above other rivals in the market. Later put-on hold by National Company Law Appellate Tribunal.
Free and Fair market is needed to balance the need for innovation and to protect the rights of people & society. There is need to create a safer digital space in which the fundamental rights of all users of digital services are protected